Reserve Bank Of India Governor Warns About Crypto Risks

Key Points:

• Shaktikanta Das, the governor of India’s central bank, demanded a ban on cryptocurrencies and suggested CBDCs as a substitute since they would lessen the need to issue fiat money.
• Cryptocurrencies, according to Das, have huge inherent risks that might jeopardize monetary stability.
• India is one of the several countries working on a CBDC project. According to reports, the Indian rupee was going to be introduced digitally by the central bank of the nation.

If private cryptocurrencies are allowed to proliferate, they will be the root of the next financial catastrophe, the governor of India’s central bank said on Wednesday.

The governor of the Reserve Bank of India, Shaktikanta Das, advocated for a ban on cryptocurrencies and suggested central bank digital currencies (CBDCs) as a replacement since they would lessen the need to produce fiat money. He used the most recent collapse of FTX as an illustration of the danger the market poses to the economy. He said the following while speaking at the Business Standard BFSI Summit:

“Cryptocurrencies have… huge inherent risks for our macroeconomic and financial stability.”

Das called cryptocurrencies “speculative” and added that he believes they should be outlawed, saying his major worry is that they have no intrinsic worth.

“It is a hundred percent speculative activity, and I would still hold the view that it should be prohibited … because, if it is allowed to grow, if you try to Regulate it and allow it to grow, please mark my words, the next financial crisis will come from private cryptocurrencies,” Das said at an event.

Furthermore, Das said that the lack of central bank supervision of cryptocurrencies posed a significant inherent danger to the macroeconomic and financial stability of nations, especially in light of the fact that digital assets were initially intended to bypass the system or disrupt the system.

The governor’s anti-crypto stance is not new, despite that Nirmala Sitharaman, India’s finance minister stated in July that the country’s central bank was pressing for a ban on cryptocurrencies and that it should be implemented immediately. She also appealed for international cooperation.

The e-rupee, a CBDC that is presently in the pilot stage and which the governor of the central bank said acts as money itself, is an alternative provided by the central bank of India. It uses the Unified Payments Interface (UPI) as a payment platform.

According to the report, the governor of the central bank recommended CBDCs over cryptocurrencies because they would lessen the need to produce fiat money and speed up international trade.

One of the many nations engaged in a CBDC initiative in India. According to reports, the Indian rupee was going to be introduced digitally by the central bank of the nation.

The Indian government is drafting cryptocurrency laws that may forbid some cryptocurrency-related behavior while establishing a legal framework for the digital currency issued by the central bank.

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